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Exam 22: Master Budgets and Planning

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Question 41

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A budget system based on expected activities and their levels that enables management to plan for resources required to perform the activities is:

A) Traditional budgeting.
B) Management budgeting.
C) Master budgeting.
D) Activity-based budgeting.
E) Cash budgeting.

F) A) and B)
G) D) and E)

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Question 42

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In preparing a budgeted balance sheet,the amount for Accounts Receivable is primarily determined from:

A) The purchases budget.
B) The sales budget.
C) The capital expenditures budget.
D) The budgeted income statement.
E) The selling expenses budget.

F) A) and C)
G) A) and D)

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Question 43

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The set of periodic budgets that are prepared and periodically revised in the practice of continuous budgeting are called:

Which of the following would not be used in preparing a cash budget for October?

Which of the following is not a result of following a well-designed budgeting process?

Activity-based budgeting is a budget system based on expected activities and their activity levels,which helps management plan for the resources required.

Sweeny Co.is preparing a cash budget for the second quarter of the coming year.The following data have been forecasted: Additional data: (1)Sales are 40% cash and 60% credit.The collection pattern for credit sales is 50% in the month following the sale and 50% in the month thereafter.Total sales in March were $125,000. (2)Purchases are all on credit,with 40% paid in the month of purchase and the balance paid in the following month. (3)Operating expenses are paid in the month they are incurred. (4)A minimum cash balance of $40,000 is required at the end of each month. (5)Loans are used to maintain the minimum cash balance.At the end of each month,interest of 1% per month is paid on the outstanding loan balance as of the beginning of the month.Repayments are made whenever excess cash is available. Prepare the company's cash budget for May.Show the ending loan balance at May 31.

The usual budget period is:

Keegan Company manufactures a single product and has a JIT policy that ending inventory must equal 10% of the next month's sales.It estimates that May's ending inventory will consist of 20,000 units.June and July sales are estimated to be 280,000 and 290,000 units,respectively.Compute the number of units to be produced that would appear on the company's production budget for the month of June.

A plan that lists the types and amounts of selling expenses expected during the budget period is called a(n) :

A ________________________ is a continuously revised budget that adds future months or quarters to replace months or quarters that have lapsed.

A budget can be an effective means of communicating management's plans to the employees of a business.

The merchandise purchases budget depends on information provided by the sales budget.

A cash budget is a plan that includes the expected cash receipts and cash expenditures during each of the periods that it covers.

Barrett's Fashions forecasts sales of $125,000 for the quarter ended December 31.Its gross profit rate is 20% of sales,and its September 30 inventory is $32,500.If the December 31 inventory is targeted at $41,500,budgeted purchases for the fourth quarter should be:

Budgets are normally more effective when all levels of management are involved in the budgeting process.

In preparing financial budgets:

When preparing the cash budget,all the following should be considered except:

A capital expenditures budget is prepared before the operating budgets.

A plan showing the planned sales units and the revenue to be derived from these sales,and is the usual starting point in the budgeting process,is called the: